President Barack Obama is kicking off budget dealings with congressional leaders with new leverage from last week's big win, but he confronts a tricky path to avoiding a market-rattling "fiscal cliff."

President Obama speaks to reporters after viewing damage from Sandy on Staten Island (YouTube)

Obama's GOP rivals promise greater flexibility on new tax revenues, but Democrats face pressure from liberal interest groups urging him to take a hard line and avoid cutting big benefit programs like Medicare and food stamps. It's up to Obama to navigate the course toward an agreement.

At issue is a one-two punch of expiring Bush-era tax cuts and across-the-board spending cuts set to hit in January as punishment for the failure of a gridlocked Congress to reach a deficit-cutting deal last year.

Economists and business leaders warn the combination could send the economy back into recession.